Fox Rent A Car and the California Attorney General’s office have settled a complaint initiated by San Mateo County and the State of California. In the complaint, Fox Rent A Car was accused of unfair business practices, and in the course of business, using GPS tracking units in their rental fleet. Fox has agreed to pay limited restitution and fines.

Eligible for restitution will be patrons whose movements were tracked by a global positioning system (GPS) device and who had to pay a surcharge for violating Fox’s restriction on traveling outside California, Arizona and Nevada. Civil Code section 1671 prohibits assessment of such “liquidated damages penalties.” In this case, the surcharge violated the statute because it had no connection to any damages allegedly caused by a driver’s violation of the travel restriction, according to the Attorney General.

The $700,000-plus settlement also requires the defendants to reimburse former customers who were forced to purchase insurance, according to the California Attorney General’s office. Civil Code section 1936(n) prohibits rental companies from requiring customers to buy insurance or similar products.

Further, former customers may receive compensation for charges for alleged vehicle damage that Fox did not tell consumers about until months after they returned rentals.

The use of GPS and other electronic tracking devices in rental cars is restricted under Assembly Bill 2840 that took effect January 1, 2005. The law permits the devices to be used only for specific purposes, such as tracking down lost or stolen vehicles and bars use of the devices to track renters’ movements or to assess penalties arising from renters’ use of the vehicle.

According to a statement made by Fox, the company used the GPS devices for a period of six months in 2004, prior to a 2005 law that placed restrictions on the use of GPS devices in California.

Mark Mittleman, Fox’s attorney said, “The matter was resolved in order to move on and end the litigation.”